Trends in Leasing: a Pathway to Improved Brand Loyalty – and Future Sales

New vehicle leasing has grown dramatically in the U.S. since the financial crisis, climbing to almost 23 percent of all new vehicle transactions in the first three months of this year vs. 16 percent in the same time period five years ago, according to IHS Automotive analysis. The growth has been similar in the luxury space, where leases now account for 47 percent of the business, up from 40 percent in 2010. In fact, in some sectors of the luxury market, including compact and sub-compact cars, leasing comprises more than 55 percent of all new business. In these segments at the lower end of the luxury market (based on price), low lease payments are aggressively promoted to appeal to owners of non-luxury vehicles who are drawn to the image of luxury marques.

Leasing is also expanding in the U.S. mainstream market, including the fiercely competitive (and profitable) half-ton large pickup segment. Here leasing has more than tripled from 4 percent of all new vehicle transactions five years ago to 14 percent – a snapshot taken through March of each year.

Leasing’s advantages (versus purchase) to the consumer, including a lower down payment and lower monthly payments, among other things, have been heavily promoted. What hasn’t gotten as much visibility are the benefits of leasing to the manufacturer – or to the dealer.